Kanye West controversy: Adidas wins shareholder lawsuit

Staff Report: PNN

German sportswear giant Adidas has won an appeal against shareholders who claimed the company concealed controversial behavior by rapper-entrepreneur Kanye West, also known as "Ye," before ending their partnership.

The 9th US Circuit Court in San Francisco ruled that Adidas did not mislead investors. Shareholders alleged that their investments were harmed after severing ties with West, causing a decline in Adidas share value.

West’s Yeezy brand was once among Adidas’ most successful partnerships. However, the collaboration ended in 2022 due to West’s Nazi-supporting and anti-Semitic comments, costing the company hundreds of millions of dollars.

Court records stated that the HLSA-ILA Funds, representing investors, argued that Adidas had maintained the partnership despite knowing West’s controversial behavior for years. They claimed Adidas internally considered his conduct but did not disclose risk information to shareholders.

The court stated that any ordinary investor understands that a partnership with a celebrity carries inherent risks of inappropriate behavior. A previous district court had dismissed the HLSA-ILA case, which the firm then appealed.

Yeezy had been particularly profitable for Adidas. In 2021, Yeezy shoe sales reached approximately €1.5 billion (£870 million; $1.17 billion). After the partnership ended, Adidas had over €1 billion of unsold Yeezy shoes in storage. In 2023, the company announced that these products would be sold, with some proceeds donated to charities working to prevent hate crimes.

This legal victory frees Adidas from shareholder claims and protects the brand’s reputation.